- 64 custodial account holders lodged a complaint to recover $22.5 million.
- Celsius contradicts ” plain language of debtors’ terms of use“.
- CEO Alex Mashinsky breaks his silence and says that they are working non-stop.
Celsius’ clients took action to recover their funds, as bankrupt crypto-lender Celsius froze all withdrawals. An Ad Hoc Group of 64 custodial account holders lodged a complaint against Celsius with the U.S. Bankruptcy Court for the Southern District of New York in an attempt to withdraw $22.5 million worth of cryptocurrency assets held under the custody of Celsius.
The ad hoc group of creditors is represented by the bankruptcy-focused law firm of Togut, Segal & Segal.
The plaintiffs raised their concerns as Celsius was not honoring withdrawals from any programs, even from custodial service. According to the complaint, it contradicts the “plain language of debtors’ terms of use” as Celsius provides the title to custody asset “always remains with the user.”
As per the Celsius statement last revised in April 2022, it states:
Celsius will not transfer, sell, loan or otherwise rehypothecate eligible digital assets held in a custody wallet unless specifically instructed by you, except as required by valid court order, competent regulatory agency, government agency or applicable law.
According to the investigation, two firms that hacked Celsius during a November 2021 funding round were not willing to pay additional funds due to the potential risks, citing people with knowledge of the situation.
Nonetheless, WestCap Group and Canadian pension fund Caisse de dépôt et placement du Québec led a $750 million Series B funding round for Celsius, which came to the rescue and helped the platform reach a $3.5 billion valuation.
@CelsiusNetwork team is working non-stop. We’re focused on your concerns and thankful to have heard from so many. To see you come together is a clear sign our community is the strongest in the world. This is a difficult moment; your patience and support mean the world to us.
— Alex Mashinsky (@Mashinsky) June 15, 2022
In addition to that, a volatile crypto market crippled Celsius and led them to onboard attorneys to find alternatives to the credit crunch they are facing. CEO Alex Mashinsky broke his three-day silence and said that they were working on the users’ concerns.
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
